Moore on Salomon vs. Salomon @UCLLaws @hartpublishing

Marc T. Moore, University College London Faculty of Laws, is publishing Salomon vs Salomon in Landmark Cases in Company Law (V. Barnes and S. Wheeler, eds., Hart Publishing) (forthcoming ).

Salomon v Salomon is widely regarded as the most significant case in English and wider Commonwealth company law history. It is typically the subject of introductory company law lectures and textbook chapters throughout much of the common law world, and no proper account of the history of the business corporation is complete without it. Accordingly, few would disagree that Salomon is a landmark – if not the landmark – case in English company law. At the same time, though, Salomon is also one of the most misunderstood cases in English legal history, and even today I suspect that many students and even teachers of company law continue to labour under certain misapprehensions about the case. In this seminar, I will argue that, far from being a so-called “landmark” company law case, Salomon is a case that should never really have come to court in the first place, or at least that should never have had to proceed beyond the initial trial court stage. As such, the principal significance of Salomon’s case resides not on a doctrinal but rather on a factual level, in enabling the authoritative reputational redemption of the Jewish defendant Aron Salomon and his family in the face of a barrage of hostile, unfair and manifestly false imputations as to their perceived conduct, motives and character traits.

Download the chapter from SSRN at the link.

Macey on the Central Role of Political Myth in Corporate Law @JonathanMacey @YaleLawSch

Jonathan R. Macey, Yale Law School, has published The Central Role of Political Myth in Corporate Law. Here is the abstract.

This Article shows that a variety of fundamental rules of corporate law are based on a set of myths. The Article explains that these myths play an important role in attracting public acceptance and support for what otherwise would be unpopular and controversial regulations. Thus, one can view the role played by myth in corporate law in a particular context as having either positive or negative social effects depending on one’s opinion of the social value of the underlying legal rule that being buttressed and affirmed by the myth. Four political and sociological myths that continue to play important roles in law are examined. These are: (1) the myth that corporations are owned by their shareholders and represent ownership interests in businesses rather than mere financial claims on the cash flows of those businesses, coupled with certain political (voting) rights that protect those claims; (2) the “shareholder value myth,” that corporate officers and directors are legally required to maximize firm value; (3) that subsidiary companies are independent from and not subject to the control of their parent companies and must remain so in order for the parent company to avoid liability for the contract and tort debts of the subsidiary under various alter ego and piercing the corporate veil theories of corporate law; and (4) the legal regulation of insider trading is justified because of the necessity of creating a “level playing field” among participants in financial markets. Reasonable people can disagree about whether the role played by these myths is normatively positive or negative in each of these contexts.

Download the article from SSRN at the link.

Fairweather on Redressing Inequality in Personal Credit Transactions: 1700-1974 @AucklandUni

Karen Fairweather, University of Auckland, has published Redressing Inequality in Personal Credit Transactions: 1700-1974 in 2017 Private Law and Power 53 (Kit Barker, Simone Degeling, Karen Fairweather, and Ross Grantham, eds., Hart Publishing, 2018). Here is the abstract.

While the phenomenon of consumerism can be traced back at least as far as the eighteenth century, the idea of protecting individuals qua consumers is far more recent.

The full text is not available from SSRN.

Ruskola on Corporation Law in Late Imperial China

Teemu Ruskola, Emory University School of Law, is publishing Corporation Law in Late Imperial China in Research Handbook on the History of Corporate and Company Law (Harwell Wells, ed., Edward Elgar Press, 2018). Here is the abstract.

According to received wisdom, there is no such thing as a Chinese tradition of corporation law. In Max Weber’s pithy conclusion, “The legal forms and societal foundations for capitalist enterprise were absent in traditional China.” Although this claim is intuitively appealing, it is incorrect, or at least wildly exaggerated. Drawing on earlier work, I argue in this chapter that in late imperial China there existed a tradition of “corporation law,” to use a term that admittedly sounds anachronistic. Conventional wisdom to the contrary notwithstanding, and despite Confucian hostility to commerce, even before the introduction of European law at the turn of the century, the Chinese operated “clan corporations,” or relatively large commercial enterprises whose existence was justified by the legal fiction of kinship. Because of this fiction, these enterprises were governed by the norms of family law which in turn performed many of the key functions of corporation law.

Download the essay from SSRN at the link.

We Were Told There'd Be Cake @plagiarismtoday @dorfonlaw

Diane Klein, University of La Verne College of Law, discusses the interesting Case of the Copycat Cake here (from Plagiarism Today, cross-posted from Dorf on Law). Oh, there are intellectual property and business law issues, but there's also popular culture--lots of things to chew on. Sweet. 

Lipton on the Transplant and Adaptation of Company Law in Colonial Victoria, 1850-1900

Phillip Lipton, Monash University, Department of Business Law & Taxation, has published The Transplant and Adaption of Company Law in Colonial Victoria 1850-1900. Here is the abstract.

This paper deals with the transplant and adaption of company law in the Australian colony of Victoria during the second half of the nineteenth century. It seeks to place the development of company law in Victoria in its economic and institutional contexts so as to inform a consideration of the circumstances that are conducive to successful legal transplants. The gold mining industry was a particularly important driver of economic development and prosperity. However the availability of resources may be either a blessing or curse. In the case of nineteenth century Victoria, the extraction of gold was a decided blessing due to a number of favourable institutional factors including the successful transplant of English company law which facilitated the formation of gold mining companies and the necessary large-scale investment. An important factor in this success was the preparedness of the legislature to respond to the needs of the wider business community and especially the gold mining industry. This paper then examines some of the significant innovations that assisted the gold mining industry, in particular the introduction of the no liability company and other later investor protection innovations that modernised company law.

Download the article from SSRN at the link.

Homer In the Boardroom

Andrew A. Schwartz, University of Colorado Law School, has published Corporate Legacy at 5 Harvard Business Law Review 237 (2015). Here is the abstract.

Throughout human history, people have sought to overcome the human condition and achieve the only form of immortality reasonably available to us: a legacy that “lives on” after we are gone. Legacies can be established in countless ways, including art (Leonardo da Vinci), literature (William Shakespeare), and athletics (Babe Ruth). The corporate form, though not previously recognized as such, can likewise serve as a vehicle for achieving an enduring legacy because corporations are endowed by the law with “perpetual existence.” Publicly traded corporations in particular are well suited for this purpose, given the significant social and cultural role they play. Once a company goes public in an IPO, however, it suddenly becomes vulnerable to takeovers, which can end its corporate existence and thereby any hope of an enduring legacy. This unwelcome fate can be avoided, however, if a company goes public with powerful takeover defenses in place — which practically all do, according to new data presented here. Mature public companies, by contrast, are controlled by people who joined the board long after the IPO. These directors lack the same passion for the company’s independent existence because, unlike the pre-IPO shareholders, their legacy is not tied to the company. Accordingly, a mature public company may be amenable to abandoning its takeover defenses. The data presented here shows that practically all new public companies — those launching their initial public offering (IPO) — go public with powerful takeover defenses in place. This behavior is puzzling because the adoption of takeover defenses presumably lowers the price at which the pre-IPO shareholders can sell their own shares in and after the IPO. Why would founders and early investors engage in this seemingly counterproductive behavior? This Article claims that IPO firms adopt takeover defenses, at least in part, so that they can remain independent indefinitely and create corporate legacies that last for generations.

Download the article from SSRN at the link. See also Andrew A. Schwartz, The Iliad and the IPO at the Harvard Law School Forum on Corporate Governance and Financial Regulation.

It's a Wonderful Life, Mr. Scrooge, and Other Tales From La La Land

Larry E. Ribstein, University of Illinois College of Law, has published "How Movies Created the Financial Crisis", in the Michigan State Law Review for Winter 2009. Here is the abstract.

Narrative makes sense out of reality and can forcefully persuade listeners to a particular point of view. Artists in general have a narrative of business which springs from their belief that at least some aspects of business are antithetical to art. Filmmakers add to this a resentment of the constraints capital places on their art. Film is particularly persuasive because of its vivid images and because of the consistency of filmmakers’ anti-capitalist perspective on business. Filmmakers’ negative portrayal of capitalists has helped to prepare the public to believe that capitalists - and not government, economic cycles, greedy people or business generally - caused the financial crisis. This will help the public accept a regulatory agenda built on this premise, specifically including the regulation of hedge funds.

Download the Article from SSRN at the link.

The History of Branding and Trade Mark Law in the UK

John Mercer is publishing "A Mark of Distinction: Branding and Trade Mark Law in the UK from the 1860s," in Business History (forthcoming). Here is the abstract.

The development of branding is a neglected theme in business history. This article examines the emergence on a large scale of the unique product brand name - distinct from a company name or product descriptor - in the UK in the latter nineteenth century. It looks at the interaction of branding strategies and UK trade mark law, which is shown to have accorded property rights in word-based marks only gradually and shaped the development of branding in the UK. Trademark application data from the 1870s to the 1920s is cited to illustrate the widespread take-up of the brand name in the UK from the 1880s, and to consider its use by different types of consumer goods firms. The article then analyses the effects of such branding into the twentieth century, including its contribution to competitive advantage, the introduction of brand architecture, and the problem of brand genericisation. It is argued that the adoption of the brand name marked a major shift in brands, from descriptions of origin to objects of artifice.

Download the article from SSRN here.

Business Law and Narrative

Michigan State University College of Law is hosting a symposium on business law and film called the Business Law and Narrative Symposium. The symposium takes place in East Lansing on September 11. Here's a description.

Narratives are stories.

Narratives both reflect and influence society, from the broadest popular cultural viewpoints down to the private communications between individuals. This dynamic process begins with the narrator, whose technique and viewpoint influence how the story is told. A successful narrative influences the viewpoint of the audience, modifying public perceptions of the subject. These changing public perceptions in turn influence the viewpoint of future narrators. Through this dynamic narrative process, public viewpoints evolve, leading to changes in the cultural, political, and legal landscapes.

Business narratives include the stories told within the legal profession, as well as those communicated to the general public through a vast array of media, including news, books, movies, and the Internet. Recent business narratives include the Bernard Madoff scam, the auto industry woes, bank bailouts, and the subprime mortgage crisis. From Enron and Martha Stewart to the current crises, new villains emerge, forever changing public perceptions of business and the corporate world.

A symposium at the Michigan State University College of Law invites general treatment of the question of how narrative influences the cultural and political understanding of business and how narrative might–or might not–play a role in corporate law.

Recent events bring to the fore a call on narrative as a means of interpreting what has happened, with possibilities for simple explanations that attempt a narrative form. Distinguished corporate law experts and scholars in history, literature, and narrative will present their papers and discuss the challenges narrators face in creating an accessible, widely shared account of business culture, corporate law, or financial events, given the complexity of business and the abstract nature of the corporation. Do such business narratives supply a widely shared consensus comparable to large narrative understandings of other social enterprises? Do cases or scholarship deploy narrative materials? If so, how might they be evaluated as narrative? Does literature constitute a source of insight that informs the social understanding of business realities and personalities? How does gender influence narrative?

MSU Law Professor Mae Kuykendall organized the symposium to further explore the intersection of business law and narrative, as discussed in her 2007 article, "No Imagination: The Marginal Role of Narrative in Corporate Law." Distinguished corporate law experts and scholars in history, literature, and narrative will gather to address these questions on September 11, 2009, at the Michigan State University College of Law. The Michigan State Law Review will publish the papers presented in what promises to be a trenchant discussion of an important topic. We invite you to join us for our discussion of business law and narrative.

Here's a link to the program.